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749 A meeting of the Board of Governors of the Federal Reserve SYstent was held in Washington on Saturday, May 22, 1943, at 11:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Mr. Mr. Mr. Morrill, Secretary Betheal Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinafter r eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Pecieral Reserve System held on May 21, 1943, were approved unanimously. Memorandum of this date from Mr. Morrill, submitting the res411 of John C. Carmen as a guard in the Secretary's Office, to be-°111e effective as of the close of business on June 14, 1943, and rec°rnMenditig that the resignation be accepted as of that date. The resignation was accepted with the understanding that pro9er deduction would be made from his salary for five hours of Unearned sick leave. Letter to Mr. Neely, Chairman of the Federal Reserve Bank of Atiarta 'reading as follows: spo,„ "Reference is made to your letter of March 31, 1.n reourle inquiry of March 26, regarding the action COt -Y Your directors on the resolutions adopted at the enee of Chairmen on October 5, 1942. DWe are Pleased to learn that the directors of the Federal prin . -,eserve ban, ic of Atlanta are in full accord with the 431es relative to the relationshi) of Reserve Bank Audit02 It is noted that, at the February meeting of the I 750 5/22/43 -2- "directors, President McLarin presented a resolution embodying the exact language of the Statement of Principles apProved by the Conference and recommended that your directors 48 .4°Pt the resolution. However, you state that your directors 'declined to do so on the ground that the Bank already f llY complies with the spirit and believes that it is cornPlying with the letter of the eight paragraphs in 6-893, and that, in the absence of any specific criticisms, the ' t ssage of the resolution would imply an unwarranted reflection on the existing conduct of the Bank.' "From the standpoint of the Board of Governors, the rec/) ignition and maintenance of the various principles in your , 44k is the important consideration, and whether or not the eecise wording of the Statement of Principles is made a matr of formal action is not a material point. However, we to See that the passage of a resolutidon, such as that would • ply an unwarranted reflection on the exconduct of the Bank. In fact, it would appear to us es s, a convenient method of recognizing formally what, in your stse, aPparently has been an established practice. We underthe '°f course, that your directors are in full accord with is ,elArit of the resolution adooted at the Conference, which tert important thing, and we are only commenting on the matpart o er fe in order that there may be no misapprehension on the eZ directors as to the nature of our interest in the subiY j ,"With resoect to the procedure for reporting indebtedness IDolleserve Bank officers and employees, it is noted that the by rlre in effect at your Bank differs from that suggested and (e Conference of Chairmen as regards paragraphs (1),(2)) esae‘P . . As you will recall, these portions of the procedure be sn' dlallY provide: (a) that each individual report should Portlibitted sealed to the Chairman; (b) that, before the repri4 , are presented to the Board of Directors, or the approportse committee thereof, the Chairman should have such rethat 41eviewed and commented upon by the President; and (c) formaire Auditor should review pronmtly the reports and in1Z obtained from reports of examination. that 4. - h regard to paragraphs (1) and (2), it can be said devel'oue suggested Procedure for handling such reports was end tbrd after very careful consideration of the problem, 25, 19,4t,71,in conformity with the Board's letter S-8 of June the Bo' fr9055), these reports were to be made to that Xd of Directors. As to paragraph (3), it is ncted view the Auditing Committee at your Bank is hereafter to reclear tle,8! reports also, but from our information it is not "" the Auditor's responsibility for reviewing such 751 5/22/43 reports at your Bank conforms to that contemplated by the !,11gge3ted procedure. You are familiar, of course, with the .!7.1scussion on this point at the Conference, but it is our ''hought that the reasons advanced in that discussion clearly Showed the desirability of having all indebtedness reports accessible to the Auditor and of having him review them as ta , matter of regular procedure and requiring that he report IL the Board of Directors, or the Chairman or a committee 4 ere°f, any matters which in his opinion should be brought L'o their attention. w2he Board approved, among others, the resolution adopted at the Conference relative to the procedure for rePorting indebtedness of Reserve Bank officers and employees, d has been pleased to note the progress made among the ReoTre Banksin bringing about the implementation of the van, resolutions adopted by the Conference of Chairmen. It assumed that you will wish to review again with your directors the matter of the indebtedness reports procedure, t°14t1ng out to them the fundamentals involved and the mate acIrs discussed at the Conference which resulted in the be;Ptl°n of the resolution. The Board would appreciate advised as to the further actions taken with respect O he sLzggested procedure." J r Approved unanimously. Letter prepared for the signature of Chairmen Eccles to HonThomas F. Ford, House of Representatives, reading as follows: pe ,"In response to your letter of May 17 in regard to the te°P-Les Bank of Lakewood Village, California, since the mathas been the subject of correspondence between that bank sue Board recently, I think the best way to answer your en s'lon is to furnish you copies of our recent correspond3 ce with that bank. This consists of a letter dated April 1711.7cidressed to the Board by the Peoples Bank of Lakewood let age and Signed by E. B. Martin, Vice President, and a sari'? dated April 27, 1943 from the Federal Reserve Bank of That rancisco to Mr. Martin containing the Board's reply. With reply st(--tes the position which the Board has taken 1,01,,e5Pect to the application of the Peoples Bank for apban -4 'proposed elan of reorganization involving that -- end two other existing banks." Approved unanimously. 752 5/22/43 —4— Letter to "The First National Bank of Holdrege", Holdrege, Nebrasi a, reading as follows: "This refers to the resolution adopted on November 10, 1942, by the board of directors of your bank, signifying the bank's desire to surrender its right to exercise fiduciary P°Ivers heretofore granted to it. "The Board, understanding that your bank has been dis— narged or otherwise orooerly relieved in accordance with the all of its duties as fiduciary, has issued a formal cer i ' t e•u ht ficate to your bank certifying that it is no longer au— tdficate th°rized to exercise any of the fiduciary powers covered by Provisions of section 11(k) of the Federal Reserve Act, atarded• This certificate is enclosed herewith. 1a this connection, your attention is called to the fact that, under the provisions of section 11(k) of the Fed— Reserve Act, as amended, when such a certificate has en issued by the Board of Governors of the Federal Reserve nem to h shall no longer be s _uJect to national bank, such bank (1) the provisions of section 11(k) of the Federal Re— th e Act or the regulations of the Board of Governors of Federal Reserve System made pursuant thereof, (2) shall e!ititled to have returned to it any securities which it foir„ tIre dep sited with the State or similar authorities not e,e protection of oriwte or court trusts, and (3) shall Of tt,—ercise any of the powers conferred by section 11(k) Botl4e Federal Reserve Act except with the permission of the of Governors of the Federal Reserve System." Z Z Approved unanimously. Me morandum dated May 19, 1943, from Mr. Ransom, recommending that the Board aporove the letter quoted below to the Presidents of all the Pectoral Reserve Banks submitting a proposed amendment to Regulation 111, me Consur Credit, comment from them and through them from the afor tl ' lThe memork,indum stated that the changes which would be made by the Pre9osed amendment were essentially technical, designed to improve the Prc-lotical Workings and administration of the regulation, and would le4liellachaaged all the fundamentals, such as the list of articles, the 1.'eel'il)ed down payments, the maximum maturities, etc., since it was 753 5/22/43 -5considered inadvisable to make any change in these at this particular tizes "Consideration is being given to a proposed Amendment t' 10 to Regulation in draft form as shown by the enclo"re. The matters to which the or000sed amendment relates are outlined on the attached summary. "The Federal Reserve Banks are requested to make comrmerits and the B ,a,11d suggestions on the oroposed changes and to advise of their own recommendations. They are also refiu?sted to consult with interested persons in their discts, particularly national trade associations, and ob! 0-n their comment. It is sugested that the national rociations be asked to submit their comments in writing. material and your recommendations should reach the Board by June 14, 1, "You are at 1943. liberty to show the summary and the draft to any person consulted, but it will be appreciated the Reserve and• Banks and the trade will treat the proposals leasdiScussions as matters not for publication or press re- Approved unanimously. Letter to Mr. J. W. Feikert„ Installment Loan Department of The i..,ranki York, in Square National Bank, Franklin Square, Long Island, New reading as follows. "Thi at ent r is in reply to your letter of May 8, 144.), ^ calling 116.8 -on to SupolementLry Conserv;tion Order L-41-d which serv , t1,I LI effeof ct excluding from the restrictions of the onwith' 1-0n Order the re-siding or re-roofing of any structure the „"estos Siding or roofing material where any part of othe 'sting siding or roofing is in need of painting orof the - Ilaintenance and repair. You suggest that in view sUra-, se of the Order, which was to provide for the conas as°f short fibre asbestos Produced at the same time Board e might lo fibre asbestos used in the war program, the and re_ro ?end its Regulation VT so that credit for re-siding ) :,,-Llng with this material would not be subject to the maxrequirement of 12 months. Poses °u are familiar with the reasons why Regulation W imthe restrictions on the use of credit by consumers. Today, thatn eed to curb the additions to consumer purchasing power are made available whenever credit is employed is as 754 5yl;W43 -6great as ever. It is still imperative that when credit is ?btained it be paid off promotly. It is for this reason that the Board is reluctant to permit longer maturities in any -Lield than those that are now specified. Exceptions are ocCasiOflal y mde but only when on a balance of considerations the national interest would be promoted. "Up to the present time it has not appeared that the , ltuation calls for a relaxation of the credit restrictions addition to the relaxation of Conservation Order L-41 of 8.e War Production Board. The Board is Quite willing to conv1" 11 chang es and will give careful attention to any new detZ oPments affecting this Problem. An amendment to Regulation IN', however, to deal with this problem is not now in contemplation . "We very much appreciate your having written to us on c'e-L8 subject. Ihe are sending a copy of your letter end a viej °f our reply to the Federal Reserve Bank of New in eh is responsible for the administration of Regulation VT your locality, so that it may be in a position to discuss matter with you if you have further inquiries." Approved unanimously. Letter the Prepared for the signature of Chairman Eccles to Mr. BaillleY, Assistant Director of Legislative 1311cle'et re.,14 Reference, Bureau of as follows: „ ews'tTh is in reply to your request of May 4 for the Of the Board with regard to the proposal contained in ing ,:,..1575, a bill 'To prohibit Federal agencies from requirtfo s°ns to furnish burdensome and nonessential informarequire the Department of Commerce to act as the poeear.1Tent information collection agent, and for other pur"Th ilar ere is enclosed a copy of a letter containing H. asimlicintrequest that was sent to the Board by Mr. Marvin and 8./Z, Secretary to the President, on October 19, 1938, °pint PY of the Board's reply. The Board still holds the beet °I18 expressed in that letter. It believes that It ls to go too far in centralizing statistical work. Coll: tElzeitlg statistics should remain in the hands of the qualified to aetermine the inquiries that are com,ii and can readily be obtained, and to suoervise, edit, time tle,' wIct interpret the resulting material. At the same ing as"ere should be an agency ch;rged wdth the duty of actCOord clearing house of available statistical data and as —Ilating body to prevent duplication of effort. 755 5/22/43 —7— "The Board believes that the Division of Statistical Standards of the Bureau of the Budget has ably carried on the work formerly oerformed by the Central Statistical Board that the present system, whereby the Division of Statis'cal Standards operates as a coordinating statistical agency 1.,Ader the authority granted to the Director of the Budget by he Federal Reports Act of 1942, is a satisfactory type of cal organization for the Federal Government. Conseti161: the Board believes that the Proposed legislation is ot needed or desirable." Approved unanimously. Letter prepared for the signature of Chairman Eccles to Mr. F. J. ley, Assistant Director of Legislative Reference, Bureau of the 134qget$ reading as follows: "This refers to your letter of May 19, 1943, enclosing a of an enrolled enactment of S. 1041, 'to extend the during which direct obligations of the United States ay be aZI %X.cti:collateral security for Federal Reserve notes 1 comments thereon. de . "The Board of Governors feels that this legislation is teslrable and important for the reasons explained in the letorr,°f APril 26, 1943, which is set forth in the enclosed copy report of the Senate Committee on Banking and Currency thou.reference to this bill. As therein stated, if the auer,!ItY to pledge Government securities as collateral for FedReserve notes should be allowed to expire, the Federal m:rve Banks could not continue to meet the combined requireof reserves against deposits and collateral for Federal 71:ve notes due to the heavy credit requirements of war fi" ,„eing. 11Ae , cordingly it is recommended that the ?resident apPr°ye nS. 1041. 2 It is estimated that the enactment of this bill would 'ye no additional cost to the United States." Approved unanimously. Thereupon the meeting adjourned. Secretary. Chairman.
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